How to Purchase a Home at Auction
With auctions being a popular process to sell your home, let’s take a look at how to purchase a home at auction in a little more detail so you know what to expect.
Most purchases before heading to the auction, begin with a visit to the open home, but if it’s not possible for you to attend the scheduled times don’t hesitate to call the agent and ask for a viewing outside those times. (This may not always be possible.)
Of course, make sure you ask questions and don’t be afraid to view it several times – to be sure that it’s the property for you.
Once you are happy, talk to your mortgage broker – you may need to get a registered valuation and/or a building inspection, depending on your circumstances.
Ensure you are happy with the settlement date – this is the day you pay the money over and take ownership of the property. (Remember if successful at auction you will have paid a deposit – normally 10% of the purchase price).
What’s Your Purchase Price?
Sit down and think hard about how much you are willing to pay.
Once you’ve made a decision, ask yourself “What happens if someone bids $5,000 more?”
Would you go that extra $5,000 to get the home?
What about another $1,000 after that?
Keep testing until you are sure of your “walk away” price.
How to Purchase a Home at Auction
Next, you need to register to bid.
This is done through the agent.
If you want an earlier or later settlement date ask the agent to check with the seller – you may be able to get a variation to the contract.
When you get to the auction, have a chat with either the agent or the auctioneer.
Let them know you intend to bid.
And don’t be afraid to start the bidding – this lets the auctioneer know you are serious and he will not miss any of your bids if it gets busy.
If you win, all you need to do is pay the deposit and you’re on your way!
Prior to the settlement date
You have the right to a pre-settlement inspection.
We’ve written about this before: All it means is that if there is anything broken or damaged that was fine when you first inspected (e.g. at the open home), you can require the sellers to fix it or pay compensation.
Lisa and Steve Stone
Elite Agents for Ray White